About this Show

CNN Newsroom

News/Business. Latest on the day's top news stories with a focus on global news, trends and destinations. New.

NETWORK
CNN

DURATION
02:01:00

RATING

SCANNED IN
San Francisco, CA, USA

SOURCE
Comcast Cable

TUNER
Channel v759

VIDEO CODEC
mpeg2video

AUDIO CODEC
ac3

PIXEL WIDTH
1920

PIXEL HEIGHT
1080

TOPIC FREQUENCY

Irs 24, Mr. Miller 23, The Irs 21, Us 21, America 14, Cincinnati 12, Mr. George 9, Washington 7, Obama 6, U.s. 5, Lerner 5, Mr. Shulman 4, Shulman 4, Texas 4, Dana 4, Usaa 3, Subaru 3, John 3, Lois Lerner 3, North Texas 3,
Borrow a DVD
of this show
  CNN    CNN Newsroom    News/Business. Latest on the day's top news stories  
   with a focus on global news, trends and destinations. New.  

    May 17, 2013
    6:00 - 8:01am PDT  

6:00am
steven miller already in the hearing room. he was early. what do you expect he will face today? >> what he faces something you don't normally see with big controversy. which is really a bipartisan grilling. democrats and republicans equally outraged. sometimes when you have these hearings, it's more of a partisan show, members of congress trying to make political points. in this particular hearing, they genuinely have a fact finding mission. a lot of unanswered questions about who these agents were who started the -- these inappropriate criteria, that's the way the inspector general put it. how far up did it go, why was it done? and most importantly from the congress point of view, why didn't they tell congress, especially stever miller, he knew one year ago, congress investigating the very committee he is testifying before now. they were asking questions, didn't disclose, they want to know why. >> also, mr. miller tried to pave the way to this hearing with excuses and "usa today" he
6:01am
wrote in an op-ed, mistakes were made, but in no way due to any political motivation. i am thinking committee members won't stand for that. >> well, definitely on the republican side, no, i did an interview in that very room with the chair of the committee, dave camp, and he's extremely speckty call that the reason they made these criteria were for a shortcut. because they were being inundated for tax exempt status. he thinks it was political. but we'll have to hear what he has to say. what miller has to say. if he has the answers about exactly why they did it, and why if it wasn't political, it was just these conservative groups and not the more progressive groups. that's what it appears to be right now. >> may be no federal agency that invites the scorn of every american quite like the irs. even the president's fellow democrats aren't likely to tamp down the outrage of scandal.
6:02am
let's check in with gloria. clearly the obama administration is scrambling to contain this thing. with today's hearing the first of several, what kind of staying power does this have? >> this irs scandal is something that every american can understand. right, carol? this is something -- >> gloria, i want to interrupt you right now. the hearing is under way. i apologize. stay with us. let's listen. >> four days later, the treasury inspector general for taxpayer administration confirmed that, and i quote, the urs used inappropriate criteria to identify organizations applying for tax exempt status. this abuse of power began as far back as 2010. this revelation goes against the very principles of free speech and liberty upon which this country was founded. the ambulate ant disregard upon which agencies, and concerns about leadership, and let's
6:03am
establish the facts that we do know. based on the report, we know for an 18-month period beginning in spring 2010, irs in the agency's determinations unit employed key word, such as tea party, patriot and 9/12 to target tax exempt status. they were subject to further irs investigation and document requests. irs employees later expanded search to include groups concerned with government spending, debt, taxes, the constitution, the bill of rights or trying to "make america a better place to live." let me repeat that. people were targeted for trying to make america a better place to live. thighs americans had their applications delayed for nearly
6:04am
three years and 98 applicants were asked for inappropriate information, such as donor lists and whether family members planned to run for political office. during the delay and while applications of conservative groups sat untouched for more than a year, other applications with named like progress and progressive were approved in a matter of months. the headline in "usa today" from earlier this week, really says it all. "irs gave liberals a pass, tea party groups put on hold." the audit said some should be set aside related to potential political activity, but no such review was done. without objection, i entered the "usa today" news report into the record. this week, we learned that senior irs officials knew about this activity almost two years ago in june 2011, and irs leadership in washington knew about it in may 2012, a year ago. despite a two-year investigation
6:05am
by this committee, the never told americans or their representatives about this truth. we were repeatedly told this wasn't happening, that isn't being misled, that's lying. but now we know the truth. or at least some of it. we know these revelations are the tip of the iceberg. it would be a mistake to treat this as just one scandal. this may be one generating -- the one generating headlines, but in total i count at least five series violations of taxpayer rights. the right to be treated fairly, honestly, and impartially by their government in august 2010, a white house official discussed the status of a private company. the tax status of a private company, clear intimidation tactic. second, in june 2010, the targeting of conservative groups began. third, in may 2011, the irs started to threaten donors, and that they were liable for
6:06am
certain taxes. fourth, in march 2012, the huffington post published the confidential donor list for the conservative tax exempt organization. and fifth, but unlikely the final transgression, pro publica said that irs leaked confidential applications from conservative groups. mr. miller, with all due respect, this systemic abuse can't be fixed with one resignation, or two. as much as i suspect more people need to go, i suspect this isn't a personnel problem. this is a problem of the irs being too large, too powerful, too intrusive and too abusive of honest, hard working taxpayers. there isn't a person that i come into contact at home or here in washington that doesn't fear the irs. they fear the irs' ability to
6:07am
audit them and wreak havoc in their lives, especially when all they are trying to do is improve their lives, let alone, god forbid, try to make america a better place to live, which is what the irs targeted them for. under that kind of thinking, every civic group in america is at risk. the nighknights of columbus, ro, jacees, american legion and vfw clubs. the power to tax is the power to destroy. under this administration, the irs abused its power to tax and destroyed what little faith and hope the american people had in getting a fair shake in washington. this will not stand. trimming a few branches will not solve the problem when the roots of the tree have got rotten and that is exactly what happened with the entire tax system. it is rotten at the core, and it must be ripped out so we can start fresh. only then will the mesh people
6:08am
get a tax system that treats them fairly as they deserve. that's a largest discussion directly tied to the issue before us today. how and why the tax system has gone off track. many questions still remain. why did the irs repeatedly target the american people and keep that fact covered up so long? who started the targeting? who knew? when did they know? how high did it go? who leaked the private taxpayer information? why were the names of donors asked for, and what was done with those lists before they were supposedly discarded? when did the administration know about these, and what was its reaction? listening to the nightly news, this appears to be the latest on a culture of coverup and mitt call intimidation. it seems like the truth is hidden from the american people just long enough for re-election. the american people have the right to a government that
6:09am
delivers the facts, g or bad. president obama pledged to we different. he is right. america deserves better. it's time to end the corruption at the irs and fix the tax code that allows washington and the irs to pick who wins and who loses in america. i expect nothing less than total cooperation by the irs as we investigate what happened and what we must do to fix it. i recognize ranking member levin for the pump of his opening statement and his commitment to pursue this issue. >> thank you, mr. chairman. i'm going to read my opening statement. i will expand on it a bit now that i heard the opening statement of the chairman. this committee on a bipartisan basis takes seriously its oversight role. and we are fully committed to ensuring an irs that serves the
6:10am
american people fairly and efficiently. what is now completely clear, the management and joef sight of the agency's handling of tax exempt applications have completely failed the american people. i emphasize that. as we know from the inspector general's audit, the agency used totally inappropriate criteria in the review of tax exempt applications, singling out organizations for review, based on their name or political views, rather than their actual activities. these criteria changed four times over two years, with little management review or oversight. applications sat for years. work stopped for 13 months while
6:11am
one department waited to hear back from another. questions were asked that were not necessary. again, no oversight, no accountability. all of us are angry at this on behalf of the nation. and we are determined to get answers to our questions about how this happened to ensure that it does not happen again. finally, throughout this time, the irs leadership has demonstrated a total disregard for the oversight role of the congress and this committee. former irs commissioner shulman testified in front of us in march 2012. and said that in quotes, no target targeting, end of quotes, was going on. two months later, he was briefed on the investigation, and was fully informed that, indeed,
6:12am
singling out by name had occurred on his watch. he had an obligation to return to this committee and set the record straight. so did mr. miller. neither fulfilled their obligations. a little more than a week ago, louis learner in front of the oversight subcommittee, she serves as the director of the exempt organization division, and she has been directly involved in this matter. yet she failed to disclose what she knew to this committee. choosing instead to do so at an aba conference two days later this is wholly unacceptable. and one of the reasons we believe, and as i stated several days ago. ms. learner should be relieved of her duties. chairman camp and i put together
6:13am
this hearing on a bipartisan basis to get the facts. we must seek the truth, not political gain. and i just want to add in that regard, mr. camp has said listening to the nightly news, this appears to be just the latest example of a culture of coverups and political intimidation in this administration. it seems like the truth is hidden from the american people, just long enough to make it through an election. i totally, totally disagree. if this hearing becomes essentially a bootstrap to continue the campaign of 2012, and to prepare for 2014, we will be making a very, very serious
6:14am
mistake, and indeed not meeting our obligation of trust to the american people. you are here today, mr. miller, are you here today the inspector general to talk about what happened, how it happened, where it happened, who knew what when. and if instead this hearing essentially becomes an effort to score political points, it will be a disregard of the duties of this committee. so i conclude with the sentence, we must seek the truth, not political gain. we look forward to full and forthcoming answers to our questions today. >> thank you.
6:15am
before the websites aitnesses a recognized for their opening statements, i had swear them in. this is the prerogative of every chair, it's not the custom of ways and means, but it's not customary for an agency to be -- >> we want to bring in gloria boerger about what was said before the house ways and means committee hearing. what struck me, democrat, congressman sander levin, said if this hearing is just for political points it would be a disservice to the country. >> well, the hearing will be an awful lot about politics, because you what heard congressman camp talk about is the sort of culture he believes emanating from the white house, right or wrong, a whole bunch of stuff on their plate right now, and i think, look, this issue of the irs as congressman camp said, resonates with the american people, because as he said, people believe the irs is too large, too powerful and too
6:16am
abusive and that what occurred in this particular case, he said would affect every civic group in america, but every single one at risk. i think it's a very least here, what the members of congress, whether they are democrat or republican, need to find out are the whys of all of this. why did it happen? was it competence? possibility of criminal? who directed it? a couple of rogue agents or, in fact, directed at some upper level? how high did -- you know, how high did this go? i think these are the answers to the real questions that they need to get, and, of course, politics will come into play here, because this is on president obama's watch, and this is the president who has asked government to do an awful lot for people. and people don't trust the
6:17am
government to do a lot for them. >> we want to listen. this is the inspector general for the tax administration, jay russell george, let's listen to him testify. >> these applications, third, the irs requested unnecessary information from groups it subjected to special scrutiny. all three allat substantiated. the irs used inappropriate criteria to target for review, tea party and other organizations based on their name and policy positions. this practice started in 2010 and continued to evolve until june of 2011. as a the monitor shows, the irs was following inappropriate criteria. let me read to you this criteria held by the irs exempt function in june 2011. it included the words, tea party, patriots, or 9/12 prong. another criteria included
6:18am
government spending, government debt, or taxes. yet another listing criteria appeared as education of the public, by advocacy or lobbying to "make america a better place to live." finally, the criterion included any statements in the case file criticizing how the country is being run. the reason for the criteria were ininappropriate, is that they did not focus on tax exempt laws and treasury regulations. for example, 501 c 3 organizations may not engage in political campaign intervention. 501 c 4 organizations can, but it must not be their primary activity. political intervention is action taken on behalf of or against a particular candidate running for office. all these criteria appeared in the irs' own documentation as of june 20112, irs employees began
6:19am
selecting tea party and other organizations for review in early 2010, from may 2010 to may of 2012, a team of irs specialists in cincinnati, ohio, referred to as the determinations unit. selected 298 cases for additional krut snoscrutiny. the first time officials in washington, d.c. became aware was june 2011, with some executives not becoming aware until april or may of 2012. the inappropriate criteria remained in effect for 22 months. after learning of the inappropriate criteria, the director changed the criteria in jewel july 2011. however, cincinnati staff changed the criteria back to target organizations with specific policy positions, but this time, they did not include
6:20am
tea party or other named organizations. finally, in may 2012, after learning the criteria had again been changed, the exec organization of rulings and agreements, changed it to be consistent with laws and regulations. excuse me. the organization selected for review for significant political campaign intervention, again 298 in all, experienced substantial delays in the processing of their applications. the organizations experiencing these delays include tea party organizations, patriot organizations, 9/12 organizations among other organizations. as shown on the monitor, the status of the december 2012, 296 cases we revealed was 108 cases had been approved. 28 cases withdrawn and 160 cases were still open.
6:21am
zero cases had been denied. of the cases still open, some had cost two election cycles without resolution. with 108 cases approve, 38 were tea party, 9/12 or tpatriot organizations. 98 of 178 cases that received followup requests of information from the irs had unnecessary questions. our evidence indicates that staff at the determinations unit in cincinnati sent these later out with little or no supervisory review. the irs later determined questions were unneeded but not until after media accounts and questions by members of congress arose in march 2012. examples of the unnecessary information requested included the names of past and future donors, listings of all issues
6:22am
important to the organization, and what the organization's positions were regarding such issues, and whether officers or directors have run for public office or would be running for public office in the future. months after receiving these questions, 12 of the 98 organizations receive ed a lett or telephone call saying that their applications were approved. another 15 organizations were told they didn't need to respond to previous requests for information and sent a revised request for information. regarding the donor information, the irs informed us they destroyed that information. we found clear evidence that each of the three allegations were correct. was the irs using inappropriate criteria in its review of organizations applying for tax-exempt status?
6:23am
yes. was the irs delaying applications? yes. and finally did the irs ask inappropriate and unnecessary questions of applicants? again, yes. these findings have raised troubling questions about whether the irs had effective management and control in the organization function so that the public can be reassured that the irs' impartiality in addressing tax laws is presented fairly. thank you for the opportunity to present my views and i look forward to your questions. >> mr. miller, you are recognized for five minutes. >> thank you, mr. chair. thank you for the opportunity to be here today. unfortunately, given time considerations, we received the notice of hearing within the last two days, the irs was unable to prepare written testimony. i would note, i have a believe
6:24am
statement before i take your questions. first and foremost, as acting commissioner i want to apologize on behalf of the internal revenue service for the mistakes we made and poor services we provided. the american public deserve better. partisanship or the perception of partshisanship has no place the irs. it can't even appear to have a role in determining tax exempt status in the organization. i don't believe politics motivated the people engaged in the treasury inspector general's report. i believe its conclusions with consistent with that i think what happened here, is foolish mistakes were made by people trying to be more efficient in their workload selection. the listing described in the report while intolerable was a mistake. and not an act of partisanship. the agency is moving forward. it has learned its lesson. we have previously worked to
6:25am
correct issues in the processing described in the report and implemented changes to make sure this type of thing never happens again. we have completed fact finding and issues a report. we will take appropriate yakz. i will be happy to answer your questions. >> all right. thank you, mr. miller. are you still acting director of the irs? >> i am, sir. >> were you appointed by the president of the united states? >> yes, sir. >> when was that? >> i was designated as acting in november. november of 2012. >> 2012. and if i'm not mistaken, you hold two titles, acting director of the irs and deputy commissioner for services and enforcement? >> i do, sir. >> and in your role as deputy commissioner for services and enforcement, according to the irs in that capacity, you direct and oversee all major decisions
6:26am
with regard to the tax exempt and government entities division? >> that is a division that reports through -- to me through the tax exempt government entities office. >> so the website is accurate? >> yes. >> who do you report to in that position? actually in both positions, as deputy commissioner for services and enforcement? >> deputy service control, i would report to the commissioner. without holding a hearing, i would report to the deputy secretary. >> of? >> treasury. >> not a violation of irc 6103 to disclose confidential taxpayer information? >> it is. >> and that really applies to all taxpayer information? >> not quite sure what that means to be honest. >> basically in practice, not just the return. >> 6103 only galbligates us not
6:27am
disclose taxpayer information. >> a white house official in a conference call with reporters disclosed confidential tax structure of a private company? >> i probably read it in the paper, sir. >> okay. made aware of news reports? >> probably, it's a long time ago. >> did you take any steps when you learned of that? >> i don't recall. i don't -- i don't recall. i had have to go back down. >> you didn't inform the inspector general of that or your superiors that you recollect? >> i'm not sure why i would have to notify the superiors, it was in the papers. i don't remember whether we made a referral or i made a referral at that time. >> all right. according to the manufacture inspector general audit, the tar getting of conservatives groups began in 2010. when you were were made aware?
6:28am
>> may 3, 2012. >> how were you made aware? >> i was made aware of not the targeting, but aware of the process that was described in the tigda report when i asked some of our people to go out and take a look at the cases, subsequently to the -- to the public discussion over broad letters coming out. >> that was your role as acting director as well as deputy commissioner? >> i was deputy at that time. >> when you say you asked some of our people who would that have been? >> i asked the senior technical adviser for tax exempt government entities to lead a team, take a look, see what was going on in terms of cases that had gotten those letters. >> did you inform anyone of that action that you took? those steps?
6:29am
>> so i did that. i asked the senior technical adviser to do that in late march, march 23rd, 26th, something like that, and she and her team came back to talk to me in may, and subsequent to that, i'm sure i informed the commissioner, but the commissioner was aware of the letters as well. >> did you inform anyone other than the commissioner at that time? >> you mean up the chain? >> yes. >> i don't believe some of. >> or the inspector general? >> the inspector general was aware of it and was looking into it at that time. >> okay. were of was there a time that you were aware of the inspector general launching audits against conservative donors, in may 2010? >> yes. i don't remember the date, sir, but in the time frame, again, there were press accounts and
6:30am
congressionals coming in and talking about that. >> and did you learn that from the press or inquiries from >>know.s? could have been either, came up in a meeting and then it hit the press, and so i don't know. >> in any event, after learning of the information in the audit, what steps did you take? >> we investigated what happened. we took a look, and ultimately i issued a directive that said ta the law in the aarea was not cl. we had not been enforcing in the area substantially since the period of 1982 or something like that revenue ruling that talked about gift tax and c-4 organizations, and i said let's not enforce right now. let's talk about it, study and,
6:31am
that put out guidance. i thought that was the fair thing to do, mr. camp. >> when you say we investigated who would that have been? >> i don't remember, we took a look at the issue, looked at how it happened, and you were looking at it as well. >> when you say we, what does that mean? >> the i.rs looked at the issue. >> what departments? >> would have been counsel. i don't know -- >> and -- >> were youer ma ever made awar the confidential nature of the list for national organization of marriage. >> i was. >> when was that? >> that date i will have to get back to you on, sir. but i remember the issue. >> how did you find out? >> don't remember. it might have been press, might have been somebody coming to us with a congressional complaint. >> when you learned of that
6:32am
publication, did you take any steps. >> i believe we made a referral to tigda, yes. >> not sure when this referral was made? >> it would have been in the same time frame. >> shortly after you became aware of? >> it would have been. >> ever made aware of the irs leak of confidential applications for the tax exempt status of conservative groups to propublica. >> yes, i was. >> when were you made aware? >> i won't give the exact time. approximately the time it became public is when i was aware. you would know that from the timeline. >> did you inform anyone else of that? >> i believe the service informed tidga during that time, yes. >> in any of these efforts, did you ever come forward and inform the congress? >> i don't believe so, unless it came up in conversation or
6:33am
testimony. can i suggest something, mr. camp, on those two, to let you know. >> this would he about the national organization on marriage and the propulica? >> in those two situations, we went to tigda and i think mr. george can speak to what they find, what they found. we made the referrals, and i believe -- i believe what they found was those disclosures were inadvertent and there has been discipline in one of those cases for somebody not following procedures, but i will obviously let mr. george speak to that. >> you never informed the congress of any of these things that i have asked you about this morning? >> they were in the press, sir. >> all right. >> well, obviously, the urs missions statement says the role of the irs it to help america's taxpayers understand and meet
6:34am
their tax responsibilities and enforce the law with integrity and fairness to all, and i think clearly your mission is not being met. mr. george, i guess i would have one last question, mr. miller, when asked the truth and you know the truth and have a legal responsibility to inform others of the truth, but you don't share that truth, what is that called? >> i always answer questions truthfully befo truthfully, mr. camp. >> all right, mr. george. were you ever made aware of the alleged disclosure of the confidential tax structure of a private company? >> we have been alerted. >> you personally were made aware? >> in specific in general? >> you specifically. >> to a specific company or in general, sir. >> it was a specific company, but there was a disclosure of taxpayer information, the
6:35am
confidential tax structure. any information is considered confidential. as it particularly reflects tax structure of a private company. were you made aware of that public disclosure? >> we were made aware of public disclosure protected. yes. >> are you aware of the instance i'm referring to? >> the one you refer to? >> yes. >> i am aware of that, yes. >> what were you made aware of that? >> i don't have the exact date. >> how were you made aware of it? >> i believe u.s. through office investigations or made through a hotli hotline, that i'm not completely certain of. >> you don't believe you learned of it from an irs employee? >> i generally do below the commissioner or active commissioners, it goes through a
6:36am
chain. >> so no irs employee informed you. >> most likely, came from one of my principal deputies and made have received that from someone at the commissioner level. >> you are not aware, can't tell us for sure. >> at this time, i cannot, sir. >> were you ever made aware of the alleged publication of a confidential 2008 donor list of the national organization for marriage? >> i both read in the newspapers, allegations to that affect. but i have to make it clear, mr. chairman, that the internal revenue code has i have strict rules as it relates to the way that confidential taxpayer information is revealed, and i have to be very careful as to exactly how i respond and whether or not i can even acknowledge publicly some of
6:37am
these revelations you are inquiry about. >> did you respond to that information? >> a review has been -- is -- has been taken. >> is it ongoing. >> i'll have to refer with my colleague if you give me ray moment. is it ongoing? it is not ongoing. >> there are daily reports of new allegations of irs misconduct, political targeting andith clear more work needs to be done. is your office continuing to investigate these allegations? >> yes, sir. >> thank you. >> i want to go on to other things. but incident mr. camp is talking about, disclosure, what years were those, mr. miller. >> again, sir, i apologize for
6:38am
not having the date at hand. a couple years i believe. >> a couple years. who was the commissioner at that time? y >> i believe it was mr. shulman. >> who appointed mr. shulman? >> mr. bush. >> all right. let me start with two key issues. there is no question about the inappropriate criteria. i want to focus on that. but let me first ask or right up front if i might, mr. russell, during the course of your audit, were you allowed access to everyone you were requested to interview? >> to my knowledge, we were not denied access of anyone. >> did you interview employees in both cincinnati and in d.c.? >> correct. yes, we did, sir.
6:39am
page 7 of the i.t. report statsz, all of the individuals stated the criteria were not influenced by any individual or organization outside of the irs. is that correct? >> that is the information we received, correct, sir. >> did you find any evidence of political motivation in the selection of the tax exemption applications? >> we did not, sir. >> mr. miller, during your review of this matter, you indicated when you started it, did you find any evidence of political motivation on the part of employees involved in processing the applications at issue? >> we did not, sir. >> if we could put on the screen the organizational chart, is that possible from the report?
6:40am
someone going to do that? ith called high level organizational report. mr. miller, in 2010, the inappropriate criteria that singled out criteria for tax exempt by name was developed by what office? >> it was developed by an office not on here, but on page two, under louis lerner's jurisdiction. >> and where are those employees located? >> for the most part, they are located in cincinnati. about 140 folks do this work in cincinnati. a handful of people around the country report in to cincinnati as well. >> in 2011, the report finds as the director of exempt organizations, e.o. on this
6:41am
chart, and i'm afraidi it's not on the screen yet. ms. lerner's position, became aware of the inappropriate criteria, and she ordered it changed. and it was changed in 2011 to not refer by name to tea party or patriot. mr. george, that correct? >> that is correct, sir. >> mr. miller, as then deputy, were you aware of the problem with the criteria in june and july of 2011? >> i was not, sir. >> in january 2012, the criteria were changed again to, and i quote, organizations involved in limiting or expanding government, educating on the constitution and bill of rights, and social, economic reform movement. the report indicates this change was made again in the cincinnati determinations office without
6:42am
executive approval. mr. george, is that correct? >> that is correct, sir. >> it was changed without executive approval? >> that is our understanding. >> the may 2012 criteria are in place today. it states organizations with an indicator of significant amounts of political campaign intervention. the i.g. report state it clearly focuses on the activities permitted your honor the treasury regulations. mr. george, that correct? >> that is correct, sir. >> my time is up. >> at this time, y i'll yield t the chair of the committee, dr. bustani. >> thank you, mr. chair. march 222, 2012, a hearing was held in this room, and i asked
6:43am
about reports that the irs was targeting tea party groups and other groups, and i would like to play the video of his response. could we have the video? >> there's absolutely no targeting. this is the back and forth that happens when people apply for 501 c 4s. >> this was in march. march 22 of 2012. knowing what you know now, was commissioner shulman's response truthful? >> it was incorrect. but whether it was untruthful or not -- look, when you talk about targeting, we need to bet into this. when you talk about targeting, it's a perjorative term. what happened here, and i would like to go through the process,
6:44am
what happened here, someone saw some tea party cases come through, acknowledging that they would be engaged in politics. this is the time frame in 2010 when citizens united was out. there was a lot of discussion in the system about the use of c-4s. they decided let's group these cases, centralize these cases, the concept of centralization not troublesome, not targeting these people in that sense. what we're doing, making sure we bring them in and have people -- >> let me ask you this. you said incorrect. but not untruthful. was he not informed of this process? >> to my knowledge, i don't believe he knew at the time. >> because in march, you sent technical adviser to cincinnati, there were press reports. letters from chairman camp and myself dating back to 2011, so
6:45am
clearly it was congressional interest in this issue, press reports, and are you saying he was not informed of this? >> so let's divide the world to a couple of pieces here. the list that was used and there was the processing of the cases. at that time, we were aware there were issues in the processing of the cases, we were not aware of the list. i asked in late march, after the hearing i believe, for to us go in, take a look, because i thought there were problems in processing the cases, they came back with both pieces, yes, problems with processing the cases and problems with the listing. >> you were given a complete briefing on the improper selection based on political beliefs and the briefing was i think you said may 3, 2012, is that correct? >> recharacterize your question, sir. i was informed of what we had found out to date, tigda was in
6:46am
there at the time. i was told that there was a use of the list, the list seemed on kn obnoxious to us, as it is to you. >> you say it wasn't targeting, why only one side of the political spectrum singled out in this? >> look, they get 70,000 applications for 150 or 200 people to do. they triaged those, people look at them, send them either through the system because they are okay, into a mix of folks so that they can get technically fixed up. some go for substantive issues. politics, we always ask more questions. our obligation under law to do so. as mr. george indicated. >> right. i understand the process. >> a c-4 organization can do some of it.
6:47am
u.s. our obligation. >> we received letters describing process. we're trying to get to the heart of the matter. the briefing in may 2012, tax exempt applications targeted if they contained terms such as we the people, patriots, tea party. and knowing these practices, knowing -- you sent letters to congress acknowledging our investigation of these allegations, but consistently omitted that such discriminatory practices that are alleged were actually, in fact, taking place. why -- why did you mislead congress and the american people on this? mr. chairman, i did not mislead congress or the american people. i answered the questions as they were asked. >> why didn't you tell us about the terms. >> time has expired. >> thank you, mr. chairman. mr. george, you are the
6:48am
inspector general at the treasury, is that correct. >> truly there, are three inspector generals within the department of the treasury. i'm the inspector general exclusively focused on the irs. on the system of tax administration. >> oh, the irs, very good. you were appointed by president bush, is that correct? >> that's correct. >> and you state no one outside of the irs was involved in this political targeting of not for profit organizations, is that correct? >> that is the finning of this particular audit. >> no outside groups were involved. >> as of now, yes. >> who was the last presidentially appointed irs offer? >> douglas shulman. >> correct. >> appointed by george w. bush. >> that's correct, sir. >> and mr. shulman was commissioner when these improper
6:49am
and outrageous activities that both sides of the aisle recognize as being outrageous and improper, when they occurred, is that correct? >> yes it is. >> mr. george, prior to commissioner shulman, the last political head or political appointee of the irs was mr. mark everson, is that correct? >> that's correct, sir. >> appointed by president george w. bush? >> i believe so. >> and during the tenure, groups like the naacp, progressive churches in opposition to the war in iraq and environmental groups were targeted by the irs, mr. miller, while you were appointed active commissioner at the irs, you were not a career -- you are -- sorry. you are a career civil servant, is that not the case? >> it is, sir. >> and you were not a political appointee. >> i'm not a political appointee. >> what i'm trying to point out
6:50am
and basically debunk is the notion or idea of the political statements and i believe nonfactual statements by chairman camp to link these scandals to the white house or solely the targeting of conservative groups. i was the person last week who asked the question of ms. learner. as to whether or not the irs were investigating political nonfor profit organizations. and at that we were not given an answer, rather, the world only learned after she was asked a planted question at a press event and that's simply unaccept annual. but what i also think is
6:51am
important is to keep this at this point in time i would hope in a nonpartisan and maybe a bipartisan context. because you want to find the facts. we want to find out who knew what, when, and why steps were or were not taken. i was as outraged within when i learned when she was asked the question she did not tell congress when she was before congress her response was no one ever asked her. i asked her. we are all out raged or upset about this. i don't believe my colleagues believe any political organization should be targeting solely because of their thought. that's on both sides of the spectrum. i say by mr. shulman and mr. everson that there was targeting of political entities as well. that has to end. that has to end on both sides.
6:52am
the president has been very forthright and have strongly condemning that type of action as the entire administration has as has mr. lew. ask the questions, get the facts. ten we can draw our rogue conclusions. >> thank you, mr. brady is recognized. >> chairman, thank you for getting to the truth in this scandal. let's look at one of the tea party groups in my community. the founder, a small business 1, originally filed for tax exempt status in july, 2010. fully, 20 months later, in february, 2012, she received a letter from the irs with a lot of questions, intrusive. she answered every one of them and returned it well within the two-week time limit. now two years to the day she
6:53am
filed her application is still pending. but let's look at what happened to her in the three years since she applied, beginning in december, 2010, shelves fist visited by the fbi domestic terrorism unit. her personal returns and her business returns were both audited by the irs. she received four fbi inquiries. and her business received unsolicit itted audit, unscheduled audits by osha in the atf twice. now, this is a citizen and a small business woman who had never been audited by the irs or any of these agencies until she applied to you for tax exempt status for her tea party. the broader question here, is this still america? is this government so drunk on power that it would turn its
6:54am
full force, its full might to harass and intimidate and threaten an average american who only wants her voice and their voices heard? mr. miller, who in the irs is responsible for targeting conservative organizations? >> sir, let me first say i cannot speak to a given case and that we've talked about 6103, but that's -- >> this is not just one case. you know we are talking about the whole list the inspector general put up there. >> correct. >> who is responsible for targeting these groups? >> so again, i'm going to take exception to the concept of targeting. because it's a loaded term. the listing was done -- >> this was not a listing. you created a "be on the lookout list." that's not a centralized government mandated or directed listing. you had a "be on the lookout
6:55am
list" that you acknowledge. you have the case of the inspector general already verified. so the question remain, who is responsible for targeting these conservative organizations? >> so again, i think if you look at the tigda report, it answers your question. there are no names in the inspector general another report. >> so i'm asking you, not only as the acting commissioner but as the deputy commissioner over this organization who is responsible for targeting these individuals? >> sir, i don't have names for you, mr. brady. i'm willing to try to figure that out. i think tigda is looking at that. i don't think targeting again is wrong. >> you are telling us you have no knowledge of who initiated or who approved this targeting of conservative organizations? >> i will stand by what the tigda report has put out there as the facts. >> can you assure this committee that none of the information provided to the irs by these
6:56am
groups was shared or given to any other federal agency? >> that would be a violation of law and i do not believe that happened. >> you can assure us there was absolutely no sharing of this information, tigda government agency? >> tigda and others would look at that, but i would be shocked, congressman, if that happened, shocked. >> if your earlier answers are any indication, we will all read about it in the media. we ought to be getting the truth from you. mr. chairman, i yield back. >> thank you, mr. wrangle is recognized. >> thank you, mr. chairman. >> we are all outraged these occurred under the bush appointees as well as the obama appointees. >> there were no obama appointtee, so under mr. schulman, i'm not sure, i apologize, mr. wrang him, what are we talking about? >> the people once it was discovered that people were put
6:57am
under a list, a lookout list, that type of thing, regardless of what you call it. were the people responsible in the treasury department appointed by president bush or continued to serve under president obama? that's basically the question that mr. crowley was asking. >> at the irs, the commissioner was appointed under the bush administration. obviously, a treasury, those would be, at main treasury, those individuals would be obama appointtees. >> what i'm trying to say, this outrage is not democrat, republican, it involves the credibility of government as relates to american citizens. now, the president has indicated outrage. you have indicated outrage. so i would assume that we are on the same side in trying to
6:58am
determine how did this happen, who was responsible for it, how far did this cancer go? how quickly can we cut it out so that tens of thousands of irs employees have the stigma of corruption taken away from them, that you, mr. miller, who is a career employee, don't have to explain to your kids and friends that are you not involved in the scandal that all of the people that serve the government, it's too late for the congress, but it's not too late for the government to try to get its reputation cleaned up for america. so i don't want to see anger with you two, but i certainly hope before this hearing is over that you sha share with us how you intend to have your voices heard so that america would know
6:59am
that whether this was criminal activity or mistake, i don't know, but we have to get on with it. now, under 501(c)(4), we are supposed to allow political activity to take place, meaning that you can make political donations without saying how much and who made the donation, right? >> well, i think if i could restructure it. under 501(c)(4) organization donors and their contributions are fought public information, if that was the question. >> so you can make political contributions? >> can you make contributions to 501(c)(4) used for political purposes. >> yes. and you can do this as long as it's not the primary purpose. you can do this for 49% of whatever the activities are, without technically violating the law. is that not correct? >> the test is whether your primary activities are social welfare in nature.
7:00am
>> and primenary means that -- primary means technically can you do 57 political. >> we are not asking. >> i am saying you could say that? >> yes. >> after the citizens union, this was a what, united, whatever, the applications for this type of corporations explode, increased dramatically, did it not? >> they did double, yes, sir. >> so you don't have to be a political expert to know that there was an increase in political donations given to 501(c)(4)s. >> i think if one looks at the reportings on the form 1 noivent political -- >> good morning, everyone, i'm caring cos tell la, this is a special presentation. the irs is facing its first congressional hearing on abuse of power. one year ago, the agency admitted its workers were
7:01am
unfairly subjected to learned groups, to more questions than normal when they were targeting tea party activists to special scrutiny. among those testifying before the house ways and means committee, the acting commissioner, steven miller, who lost his job over the scandal, as you see, charles rangle is -- rangel is asking the questions. we have political analysts in washington. welcome to all of you. >> thank you. >> john, i want to start with you, in a nutshell so far, i should say the acting irs commissioner said he did not mislead congress when he testified in the past. he said he answered the questions passed. after an hour of testimony, we don't seem much closer to knowing nothing new. >> no, carol, that will frustrate everybody. mr. miller is trying to do himself best. she trying to protect himself, clearly, and protect his agency. he's a career employee of
7:02am
the agency. he is rejecting even the use of the term targeting. he says that's pejorative. he doesn't thing i think the word you secretary general auto, tea party groups, he's trying to suggest it wasn't done on a partisan basis. it was done because of this sudden flood of the application by these groups. they were trying to create a filing system, if you will. that won't sit well with republicans. we know the prepond rance of the cases were a part of this group. are you the acting commissioner, who did it? don't tell me generally. he wasn't prepared to go there. this is very complicated. everybody here says they want the facts not to be partisan, but, carol, as you go through each side the republican chairman started off with questions trying to say this was president obama's problem. every democrat is trying to say, remember the guy if in charge when the targeting began was a bush appointee.
7:03am
>> i'm going to interrupt you, john, we will listen to congressman paul ryan asking questions of the acting irs chief stephen miller. >> then, remember, the briefing took place in may of 2012. then you came here to a subcommittee hearing on this issue on july 25th, where we were investigating the discriminary fatory filters used to hold up the 501(c)(4) application, of groups. specifically, you were told that these conservative groups felt that they were being harassed. you were asked this question, ""what kind of letter or action is taking place at this time that you are aware of" then knowing full well these filters were being used to target certain groups, you sid and i quote, "i am aware some 20 200 501(c)(4) categories fell into this process. we did group them toke to insure consistency, to assure quality. we continued to work with those
7:04am
cases" closed quote. that was your answer to this committee after you had received the briefing that these targeting was occurring, which you just earlier acknowledged was outrageous. now, the law of governing how you must respond to congressional inquiries requires you to tell not only the truth but to tell the whole truth. you quote cannot conceal or coverup by any trick, scheme or device a material fact. how was that not misleading this "? you knew the targeting was taking place. you knew the terms "tea party put as" were being used. you just acknowledged a minute ago they were outrageous. then when you were asked about this after you were briefed about this, that was the answer that you gave us? how can we not conclude that you misled this committee? >> so that was a lot of questions, sir. >> that was one. how did you fought mislead the committee? >> i stand by my answer then and
7:05am
now. harassment implies political motivation. there is a discussion going on. there is no political motivation. >> let me ask it again. >> may i answer the question, sir? >> i'm going help you give some clarity here. here's the question you were asked, what kind of letter or action is being taking place at this time that you are aware of? >> so the discussion of the context of that and again we need to go back and look at the context, there was the listing, there was the treatment of the cases. my understanding of that question was the treatment of the cases because all of the letters that he was talking, i think it was mr. marchand was talking about i'm hearing people are complaining about letters. my response was to that. we found out about these letters. we dealt with them as has been explained, we gave more time. we went and talked to them about, about expanding the way
7:06am
they could answer it and we dealt i think fairly and successfully with the donor list issue. >> you knew of our concern of this targeting. you knew of the allegations that had been reported to this committee. we brought you here to talk about i. you had received a briefing that this targeting was taking place. but you did not divulge nato this committee when we were asking questions about this. you said in your answer that you were aware some 200 501(c)(4) letters fell into this category. ke did-to-this to continue to work those cases him you didn't mention targeting based on ideology. you didn't mention targeting based on wuz words like tea party or put as or 9-12. you knew that, but you didn't mention that to this committee. do you not think that's a very incomplete answer? >> i answered the question truthfully. >> all right. let me ask you one more question. you gave us a list the other day for efficacy organizations through 2009, may. we don't know how long these
7:07am
applications sat or how long it took to process them. just from mr. rangel's questioning and earlier testimony, the irs was doing this because they were concerned about political activities by nonprofits? that seems to be the debate taking place here. some of these that were approved were chattanooga organization for action. progressive leadership alliance and the progressive usa. if you were concerned about political activity, did you have targeting lists that contained word like progressive of organizing in their names? >> so let's step back again. let me walk you through the process. we centralized cases based on political activity evidenced in the file. we took a shortcut on some of it, but we collected, to be blunt, more than tea party cases. mr. george's long report --
7:08am
>> there were no progressive or organizing buzz words tarp used for targeting, is that correct? >> that's correct. but we collected more people because any time it was seen that political activity was a part of the file, it went into -- >> time has expired. mr. mcdermott is recognized. >> thank you, mr. chairman. these days congress can't seem to agree on whether the sun is shining, but the issue has brought us together in a way unlike ooeng anything you have seen here. we all agree these applications were poorly handled and the irs stifd us. we asked about it. our pub lethbridge servants should be held to a higher standard, none more than the agency that oversees the tax enforcement. the irs is an easy target. everybody wants to get a pitchfork when the tax man comes. but with our 24 hour media cycle passing around like lighter fluid, it's getting harder and
7:09am
harder to get to the facts and get to the issue going on here. there is a difference in my mind between stupid mistakes and malicious mistakes. the overwhelming political activities were from far right groups and examiners took a shortcut, which they clearly regret, deeply regret. the report says in black and white on page 7, quote," the determination unit employees stated they con considered the tea party criterion as a shorthand term for all potential political cases." closed quote. these applications were singled out for their names and policy position, not for the activities, which is really what they should have been singled out for. some of these political groups are delayed in getting their taxpayer status and that was wrong. as much as i dislike the right, i think it's wrong to be uneven handed in government application. the inspector general's report
7:10am
says no one acted out of malice or political motivation. mr. george, i want to know, do you still stand by that? >> we have no evidence at this time to contradict that assertion, sir. >> if we really want to root out the causes of this, we need to talk about campaign finance laws and citizens united decision in 2010, which is when this all started. it all started right after citizens united. people saw the door opened. we can get in. we can do political advertising and we won't have to report anybody's name. applications for secret money, political organizations increased by fourfold. after that, the supreme court, this small group of people in this cincinnati office screwed up. nobody's going to deny that. they've simply screwed up. but the congress, this committee messed up by not giving any clear criteria for what a real
7:11am
charitable organization is. the law is not clear and people have to make judgments and that means they've got to collect a lot of data to try and figure out what people are actually up to. mr. miller, clearly, there is a problem with our current way of determining what an organization's primary purpose is. and i want to ask you in a minute about that. i want you to think about it while i'm talking. but as i watch this conversation shift, to find out what's right and wrong and fix it to the irs is broken, let's repeal it. imagine a country without, we could appeal that along with the obamacare yesterday. i'm reminded that it's only part right, part wrong. it's also about a republican story line in this agenda. we need to find some truth here and i've heard members of this committee now talk about it. the irs can't access your medical files. is that true, mr. miller? >> correct. sir.
7:12am
>> they cannot find out your private medical information. >> that's correct, sir. >> their job in obamacare is simply to collect paid financial information on which a determination is made to whether somebody can get a subsidy for their premium. is that correct? >> were you covered and over what period is what we would be getting. >> it is not a fascist takeover that's going on here of the held healthcare system and let's not forget that the irs is one of the hardest and most hated jobs and there are thousands and thousands of good, solid, hard working americans who work every day to run this system. and a couple of people people make a problem, that does not damage the organization, in my view. you get rid of the people who made the problem. but i would really like to hear from mr. miller, what do you
7:13am
need that would make it so that this wouldn't have happened before? >> sir, there are two things, sir. and i appreciate the kind word for our people, because we are incredibly hard working and honest group, frankly. that seems to be forgotten in all this. with respect to political activity, it would be a wonderful thing to get better rules, to get more clear rules and in terms of our ability to get to this work, it would be good to have a little budget that would allow us to get more than the number of people we have to do 70,000 applications and to do our job if looking at whether an organization is tax exempt or not. >> all right time has expired. mr. noon ez is recognized. >> thank you, mr. chairman. do you know the irs director lois lerner? >> i do, sir. >> are you aware she testified
7:14am
before this committee last wednesday on may 8th? >> i believe i was. >> are you aware she did not acknowledge this investigation at the time. >> actually, i do not know. that i was engaged in other testimony that day. >> were you aware that the irs was preparing a statement to put out during this time last week? >> yeah. i don't know whether we knew at that time or not. >> wouldn't miss lerner have known that last week when she testified before the committee? >> i don't know. did you know that miss lerner was going to appear last friday may 10th on a panel called "news from the irs and treasury at the american bar association conference"? >> i knew she was appearing. i did not know the topic. >> did you or any of your subordinates direct lois bern lerner to make the statement acknowledging the targeting of tax exempt groups? >> it was a prepared q & a. >> do you know miss celia rody?
7:15am
>> i do. >> was miss rod rody's question about targeting groups planned in advance? >> i believe we talked about that, yes. >> did you ever have any contact either by e-mail, phone, or in person with the white house regarding the targeting of tax exempt groups from 2010 until today? >> absolutely not. >> how about the department of treasury? >> i certainly would have had some conversations with treasury in my role as acting commissioner because i reported to them. on this topic, it was very -- it would have been i believe i have to go back and look, very recent that that conversation would have taken place. >> how about president obama's re-election campaign? >> no. zblep did you ever have any contact with anyone associated with organizing for america or
7:16am
its nonprofit successor >> for the. >> did you ever have any contact with anyone associated with pro publica? >> i don't believe so. but there was, when this whole thing came out, that was previously referenced. i think the irs might have talked to them, yes. >> so then it would probably clarify your involvement in any of this, mr. miller, would be if you submitted to this committee your e-mail, phone records and personal schedule from 2010 until you resign, would you be willing to do that? >> i'll have to see water legally appropriate. >> you know, we could subpoena those records. >> i understand and i'll have to talk to my, the lawyers in the agency. i'm just saying, i don't know, you are asking me, then we'll talk. >> mr. chairman, i would suggest that we work hard to get those records. i would also encourage you to contact miss rody and miss
7:17am
lerner to testify before this committee at our earliest possible time. i just have one last question, mr. miller, you really are fought taking any acknowledgment that you knew anything, that you didn't do anything wrong. you've said that num triems on the record today, that you did nothing wrong. so i find it hard to believe, why did you resign or why are you resigning? >> i never said i didn't do anything wrong mr. 91ez, what i said is contained in the questions. i resigned because as the acting commissioner, what happens in the irs, whether i was personally involved or not, stops at my desk. and so i should be held accountable for what happens, whether i was personally involved or not are very different questions, sir. >> well, i hope that you would be willing to submit all your
7:18am
e-mails, phone records, any personal meetings that you had in the last four years and i think that would really i think keep your reputation in good standing with this committee and the american people. >> obviously, we'll have to talk about that. i'm not saying now. i just don't know. >> thank you, mr. miller. i yield back my time. >> mr. neil is recognized. >> thank you, mr. chairman. mr. chairman, earlier, you referenced an article from usa today. i would like for the purpose of this hearing to ensert an article from bloomberg news that appeared on my 14th, indicating there were leaning organizations a focus of the irs as well. >> without objection. >> mr. chairman, when i woke up this morning as i do just about every morning now, i went to my phone and i was curious about what the word of the day would be and the word of the day,
7:19am
because miriam webster is located in my hometown. mr. miller you have rejected the term "targeted" is that correct? >> i think it's a term that implys something that didn't exist here. >> let me draw you into the weeds based upon what miriam webster by here is irony suggested. that is they used the term litmus test which they define as a single factor as an attitude, event or a fact that is decisive in koozing these organizations. would you say that there was a litmus test? >> no, sir. the litmus test, if any, was political activity. >> okay. i have one of my constituent was contacted my office yesterday outlining -- >> okay. we're going to take a quick commercial break. when we come back, of course, we'll take you back to capitol hill for this committee hearing on what allegedly happened within the irs. we'll be right back. i describe myself as a mother, a writer and a performer. .
7:20am
7:21am
7:22am
i'm carol costello. we want to go back to the congressional hearing about the irs' abuse. stephen mirle has been taking
7:23am
questions for an hour and 22 minutes. dana, what struck me when he was asked a direct question, who is responsible for targeting tea party groups, he had no answer. >> he had no answer that he was willing to give. he was asked specifically, directly to name names. he wouldn't do so. now, there might be some legal reason why he has not, is not doing this. civiler is evaporates have -- civil servants have great, great protection. that may be a part of i. i think what is most fascinating here is how republicans have coordinated there line of questions, almost prosecutor style, kind of going from the where'd to the narrow. by the time we got to paul ryan, we heard our viewers live, he was trying to get at steven military explain why he didn't disclose to congress the fact that he knew and miller's answer, what well, i answered the questions i was asked truthfully. obviously, what republicans are
7:24am
trying to explain here, it's a state of omission. he should have when he found out about this come to congress voluntarily and fought wanot waited for congress to ask. that is not sitting well with the republicans. on the democratic side, i think it's fascinating how they are building a fartive to remind people -- owe a nartive to remind people he was a bush appointee and to explain more of the process of why these groups really blew up book in 2010. it is because of a supreme court decision, citizens united and even miller said that the amount or the number of applications for tax exempt status doubled. they really just had limited personnel to do that. he obviously said the shortcut attempt was the wrong way to go because, clearly, it was perceived as political. but it really does kind of put more meat on the bone and
7:25am
explain the context in which all of this happened back then. >> we hear lois lerner's name coming up, john king. do we know if she's going to testify or not? >> we are awaiting her to be called as a witness. she is not here today. carol, you can be certain this will continue. dana noted she is a civil servant. you have what makes this unique is that you have on the senate side, there will be hearings the democrats control. on the republican, you have this hearing today. they control the house. there is bihart san outrage and bihard san determination to get the answers, to who is responsible. how long has this been going on? was it rogue employees in cincinnati? there is a bipartisan agreement and the question as dana noted. paul rene is looking to nail the witness, if you will. saying we brought you in to talk about the subject. you did not disclose things you
7:26am
said to us. they said lois lerner was there. se said nothing about the targeting. days later in a planned, calculated question and answer question disclosed it at a public conference. what the committee smells here is number one contempt for congress, the agency has not been answering honestly. let's say on tuesday the answer is i don't know, on thursday you come into information, what the congress is trying to say the law requires you to call us an come back and say i have that information. when i told you this i was not aware of that. that's going to get to a broader question on the republicanaire republican narrative. that this president on this and other issues and his feel just look down their noses at congress and decide, we don't have to tell you anything. but then they made a calculated step to put this out in public, because they knew that inspector general report was coming down the pipeline. >> the thing that struck me at the beginning of the hearing, congressman dave camp, congressman ways and hearing
7:27am
committee seemingly put emphasis on the irs as an organization, not just on the acting commissioner here. he sort of indicted the irs. let's listen to what he said, the start. >> the power to tax is the power to destroy. well, under this administration the irs has abused its power to tax and it has destroyed what little faith and hope the american people had in getting a fair shake in walk in washington. this will not stand. trimming a few branches will not solve the problem when the roots of the tree have gone rotten. >> now, he's talking about the entire organization, not just a tiny part of it in charge of the cincinnati office, right, dana? >> oh, absolutely. he is talking about the organization there. then i think in the next breath, he pointed to the entire obama administration saying that they are 15ly with withhold fact until after the election. they took issue. i think when you look at the
7:28am
substance in the hearing, stephen miller did say, look, i admit, we need to have better guidelines for how to deal with political groups. he admit they'd do deal differently with political groups. when are you talking about what is allowed for a tax exempt status, 501(c)(4)s, that's what the subject is, they are allowed to do political activity not primarily political activity. so it is something they have to generally scrutinize more than other things. it is required of them by law. the way they went about it and the way they really just asked unnecessary questions, pretty over the top questions like are your donor, that is a group not allowed. he said, we need better guidelines. of course, he asked congress for more money, not a shocker there. we need more explanation of how we need to do that. that might be something congress has to do. >> the republicans aroundt so much asking that question. it still strikes me, john, that this acting commissioner can't
7:29am
name names, can't say who is responsible. he said, i'm not saying i didn't do anything wrong, but he couldn't articulate what it was he did wrong. >> i think there are both leadership questions there and legal questions. legal questions in that he's going to let the inspector general, he'll let congress, tease people, miss lerner and others, i'm sure by now they have attorneys or consulting attorneys, that is the big question, carol, at these hearings, what this just incompetence? was it stupidity? was it mistakes made at a bureaucracy, stupid mistakes or was it deliver -- it would be criminal if they hat in any irs office and said let's go after a group because of its political beliefs and ideology. that would be criminal behavior. mr. miller is saying that did not happen. he is defending the bour rocky case. -- bureaucracy. he is tilting the windows when he thinks he can convince the american people the bureaucracy
7:30am
didn't do anything terribly wrong here. that's why you have the outrage. he is trying to do his best here. there is a broader question too, carol. when you brought up the statement from the chairman in the very grin beginning, the republicans are trying to narrow don't these abuses at the irs. they are trying to make the case, yes, it's an independent agency. but it reports to the treasury department which reports to the president if you have this stuff going on, they know it's going on. they're not dealing with it. why didn't they tell the president right away when they found out? they're trying to promote a broader case this president simply is not a terribly good ceo, his people don't have their hands on the levers of the government they are responsible for running. >> i must say, dana, in testimony it came out the acting commissioner and the commissioner before him, mr. shulman, they found out a lot of these allegations from the newspaper. >> yeah. they did. i think most of those allegations were about something separate from this targeting or selective questioning. however, we're going to phrase
7:31am
it. but, you know, things like the whole idea of the left-leaning investigative website pro publica just really giving confidential information, the irs giving them confidential information information. that issue and a couple outside issues, they said, from the press. but i think that speaks to what republicans again are trying to do here, to say it's not just about this particular issue. there are also issues of conservatives donors being targeted excessively by the irs and other questions out there that really make it from their perspective look like the irs is going after conservatives much more than progressives. i should add that one of the things that miller did, was asked specifically denied was that -- he was asked specifically whether or not he told anybody, any of hisseriors, they miss superiors, namely obama officials. he said, no, that gives some
7:32am
cover to the obama officials and the white house, in particular, on the whole question of whether or not this was politically targeting. >> just say, we didn't know, nobody told us. we will take a quick break and go back to capitol hill after this. we got a subaru. it's where she said her first word (little girl) no! saw her first day of school. (little girl) bye bye! made a best friend forever. the back seat of my subaru is where she grew up. what? (announcer) designed for your most precious cargo. (girl) what? (announcer) the all-new subaru forester. love. it's what makes a subaru, a subaru. since i've been using crest pro-health, i've noticed a huge improvement. [ male announcer ] go pro for a clean that's up to four times better, try these crest pro-health products together. the toothpaste is really awesome. it cleans a lot. [ male announcer ] crest pro-health protects not just some, but all these areas
7:33am
dentists check most. this is gonna be a very good checkup. i feel it. [ male announcer ] go pro with crest pro-health. my dentist was so proud of my teeth today. after using crest pro-health for a few weeks, i just feel brighter, fresher, cleaner.
7:34am
7:35am
i'm carol costello. thank you for w being with us. first we'd like to check other stories him legal analysts say the surviving bus and bombing suspect will have a greater challenge in his defense. sources tell cnn that dzhokhar tsarnaev left a message in a boat where he was hiding. the suspect scribbled the bombing was payback for u.s. wars in iraq and afghanistan and the bombings were collateral damage. the investigation last month at a texas fertilizer plan are the fought ruling out an intentional fire may have sparked the explosion. the state fire marshal says three options are still on the table. a spark from a golf court, an electrical short or an intentionally set firement officials still aren't saying if the arrest of a parapedic who responded to the explosion is related to their criminal probe. for the 12th straight day gas prices fakeswide are on the rise.
7:36am
they jumped nearly 2 cents a gallon overnight. according to usa today, the reason for the price hikes? outages and extended maintenance at several oil refineries in the mid-west. more than half a billion dollars, that itself the latest jackpot on saturday's powerball drawing. no one matched all six winning numbers in wednesday night's game, so a single winner now stands to win at least $550 million. it's the third largest lotto jackpot in u.s. history. guess what, it's still growing. the cleanup continues in north texas after massive tornadoes ripped through that area on wednesday night. >> it's on the ground. >> cook county sheriff roger deeds says the search is still on for seven people missing. six people are known dead, more than 100 injured after 16
7:37am
tornado tore through several areas. some homes in granbury, texas, some homes were completely ripped from their found foundations. >> reporter: carol, i want to shou show you the area of destruction. this used to be a mobile home as you can see, it is now really a pile of debris. it is barely recognizable. you can see what's left of the home. that's the wall over there and that over there to the right is the refridge rater. it seems like it's the refrigerator. now, as bad as this looks, there is an area, a subdivision we keep talking about, about a mile from where we are, where the damage is much worse. >> oh my god! >> reporter: an outbreak of at least 16 twisters carved a path of destruction through north texas, shredding trees and destroying homes. in the town of granbury, this is what is left of the rancho
7:38am
brazos subdivision. the sheriff's office says six people were killed here. others are still missing. >> it hurts. it hurts, because i probably built one of their houses. you know, it was a part of the community. >> reporter: the rancho brazos neighborhood was known as the habitat for humanity neighborhoods. how does that make you closer? >> you are a big family. you are a part of the habitat community. you are a part of their community. >> reporter: these are homes you built? >> when you get a cans to build these homes, you get close to the homeowners, you get close to people from habitat. >> reporter: he has not been home when the tornado hit and has not been able to go back. he has seen pictures of the damage. >> i know the structure's there. i just don't know what devastation was done it to. i mean, it still looks sound, but the house that's on the
7:39am
corner, she has no roof. she's got a roof, she's got a bill hole in it. >> reporter: authorities here in north texas say most of the subdivision's 110 homes were damaged or destroyed in the storm. >> it's a mess. >> reporter: he says he is relying on his faith and his neighbors, hoping to rebuild their tight knit community even stronger tan before. now, the six people who died in that subdivision were between 44 and 86-years-old t. search continues for those seven missing people. authorities now tell us this is now a search and recovery operation. we also note the texas governor, rick perry, is expected to be in this area later today. however, we don't know exactly what it is he will be doing, the he will be touring the devastation or having a media availability. carol. >> he might be rained on, too. it looks pretty ominous where you are, alina. >> reporter: it is. it looks like it's going to be raining. that's not good news for these
7:40am
people. we understand a lot of the residents have not been allowed back in. at this point they're probably worried about what they'll be able to salvage, if anything. especially if it starts raining. >> well, there is no more threats, could there be more threats of tornadoes? we don't have any of those in place, do we? >> we have not. we really don't know much about that. it does look like it's going to be raining. >> cover up. i will check with the weather department on that question. thank you so much, alina machado. president obama calls it dangerous to our security. he summoned top leaders to the white house to address the growing number of sexual assault cases and the difficult question of how to stop i. it. nom, nom, nom. ♪ the one and only, cheerios
7:41am
our seafood dinner for two for just 25 dollars! first get salad and cheddar bay biscuits. then choose from a variety of seafood entrées. plus choose either an appetizer or a dessert to share. offer ends soon at red lobster! where we sea food differently. how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed much is the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪
7:42am
always go the extra mile.ears. to treat my low testosterone, i did my research. my doctor and i went with axiron, the only underarm low t treatment. axiron can restore t levels to normal in about 2 weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these symptoms to your doctor. tell your doctor about all medical conditions and medications. serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts;
7:43am
problems breathing while sleeping; and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. ask your doctor about the only underarm low t treatment, axiron. to my friends in texas, no watches or warnings. in fact, the weather is supposed to get better by this afternoon. you don't need to worry about more weather pains for now. onto the news, the military's dirty little secret. more arrests and cases of sexual assault, including some by the men tasked with preventing these crimes in the first place. lt. col. bar ren haas was arrested by breaking a progressive conservativive order and stalking his ex-wife. he is charged at kentucky. at ft. hood, a sergeant is under
7:44am
criminal skegs investigation after they say he may have forced someone into prostitution. there is air force lt. col. jeffrey krusinski arrested on sexual battery charges. he is accused of groping a woman at the pentagon pentagon. all of these men charged with helping alleviate the problem of sexual assaults in the military. president obama just called his top military brass for a meeting saying he will leave no stone unturned to stop such abuse. >> there is no silver billullet solving this problem. this is going to require a sustained effort over a long period of time. >> a few director of the service women's action network. thanks for being here. i present it. >> thanks for having me. >> okay. so, in that meeting that you sue the president sitting at the table with lots of military leaders, the defense secretary says he will hold weekly meetings on the topic of sexual
7:45am
abuse. will that do it for you? >> it won't do it for me. i am relieved the commander-in-chief is finally taking the problem seriously, that he's spoken out after five years of virtual silence. he won't find the answer in the military or the top brass. the military has been has become very used to this problem on the inside. it's not surprising you have a whole handful of senior officer career officer who are, themself, engaged in sexual assaults and they are engrained in the culture. i.t. has to change from the top up to the bottom down. >> do they need to bring in outside forces? >> outside experts like us, like rape crisis counsellors, like advocacy groups that focus on healthy masculinity and rape culture. the military does not speak in any meaningful way what rape culture is. last week, you had the air force
7:46am
chief of staff talk about hook-up
7:47am
7:48am
>> not just sexual assault case, but those that are equivalent in terms of the felony required in jail sentences. that needs to happen. the uniform code of military justice, harkens back to the 18th century, all of our commonly nations, our allies have moved well beyond that, have professionalized their systems. so it's impartial judges handling these serious cases.
7:49am
it's fought commanding officers who are, frankly, in over their heads, they don't qualify. they don't understand crimes. they don't understand rape culture. they need to be taken out of the process. >> afu bhagwati. thank you for being with us. >> thanks for having me. >> we'll be right back. before global opportunities .
7:50am
7:51am
7:52am
the jury deciding jodi arias' fate is deciding emotional statements from the brother and sister of travis alexander. arias sobbed in court when they talked about what he meant to them. they simply said they didn't want to see their brother's murderer anymore. cnn's casey wian has more from phoenix. >> reporter: stephen alexander was in the u.s. army in 2008 when he found out his brother travis had been murdered. as his killer emotional jodi arias watched. he told the jurors about the unanswered questions that haunt him to this day. >> how much did he suffer?
7:53am
how much did he scream? what was he saying? what was the last thing he saw before his eyes closed? what was his final to the in his head? >> next, sister samantha alexander approached the podium crying even before she spoke. >> travis was our strength, our constant beacon of hope our motivation and his presence has been ripped from our life. >> defense witnesses are expected to spoke about several mitigating factors that could spare arias' life, including her lack of a criminal past, her past efforts to convert to the mormon faith and her talent as an artist. >> this is a girl right here that you pledged when you were selected as jurors that after
7:54am
hearing, right after possibly convicting her of first-degree murder and finding a aggravating factors that you would consider giving miss arias life. >> reporter: in a trial full of gripping moment, one of the last is supposed to come from jodi arias when she is expected to plead mercy when a jury convicted her of an especially cruel murder. coming up in the newsroom, no one matched all six numbers of wednesday's drawing. the federal government jackpot will be the third largest in united states history. we'll be right back. are you still sleeping? just wanted to check and make sure that we were on schedule.
7:55am
the first technology of its kind... mom and dad, i have great news. is now providing answers families need. siemens. answers.
7:56am
vietnam in 1972. [ all ] fort benning, georgia in 1999. [ male announcer ] usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection and because usaa's commitment to serve military members, veterans, and their families is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve. your doctor will say get smart about your weight. i tried weight loss plans... but their shakes aren't always made for people with diabetes. that's why there's glucerna hunger smart shakes. they have carb steady, with carbs that digest slowly to help minimize blood sugar spikes. and they have six grams of sugars. with fifteen grams of protein to help manage hunger... look who's getting smart about her weight.
7:57am
[ male announcer ] glucerna hunger smart. a smart way to help manage hunger and diabetes. tomorrow night's powerball jackpot is now a whopping $550 million. that is the third largest ever among u.s. lotterys. jock pa jackpots have ballooned. but the odds have improved since the number of balls dropped from 39 to 35. mary newbower joins me from skype from des moines, she's with the lottery. are you the co-founder of pow errball lottery? >> i was one of the original members of the powerball game. powerball has been around 21 years, can you believe that? it was iowa and 14 other states that worked together to start this game. the idea was that individual states couldn't produce these big jackpots on their own. so they wanted to work together
7:58am
to produce big jackpots. i would say it's working. >> i would say it's working. so specifically, you sat down, came up with a way so we could see these humongous jackpots. what did you do, specifically? >> well, a few years ago, there were two separate groups of lotterys in the country selling two separate big jackpot games, one is powerball. the other is megamillion. so three years ago, all the states started selling both graims games. that helped because you have more states, more people playing, so the jackpot rises faster. last year, as you mentioned, the ticket price for powerball moved to doctor 2. it's designed to continue to deliver the big jackpots powerball is so well phone for. the interesting thing over time what is or is not a big jackpot has changed. the definition keeps going up. so we keep doing things to try to keep things fresh and keep people interested in the game. >> when you sat down, did you think in a million years the
7:59am
jackpot would be $550 million, half a billion? >> i am shaking my head. i don't think anybody perhaps anticipated that we would be where we are today. it is exciting. you know, one of the miamis we put out there all the time and we especially stress at a time like this, though, it just takes one ticket to win. don't get in over your head. just play for fun. do a little dreaming. don't count on winning. we just want people to play with their heads, not over their heads, don't jump off the deep end. >> that's so difficult, though, you know, every office in america is buying huge number of tickets so they can win. >> we do keep tips out there for folks who play in poofls, because, you know, there can be hard feelings if somebody thinks they were in the group and maybe they didn't put their money n. we always say, keep careful track of who put money in to buy the tickets. give everybody a copy of the tickets in advance so they can see the tickets that the group has.
8:00am
it just helps avoid any trouble that might come later. >> oh, advice taken, mary, thank you for being with us. >> no problem, good luck if you are playing. >> thank you, we appreciate i. thank you for joining me today, cnn newsroom continues right now. [ music playing ] hi, everybody, i'm ashleigh banfield. thanks so much for being with us. it's one of those days, a taxing day, especially for the ousted head of the irs. lawmakers want a pound of flesh for what looks to be a partisan bias in handing out tax exempt status and some other treats that go along with it. a dirty little secret in the military is not so secret any more and it is definitely not little. sexual assault is a crisis. now the tap bratop brass vowing go to war and defeat it. and the mayor of toronto, canada, denying he